On the 16th, the won-dollar exchange rate rose 6 won from the previous day, bringing it to the brink of 1,480 won per dollar. Based on the weekly transaction (9 a.m.–3:30 p.m.) closing price, this is the biggest one-day gain in 21 trading days since on the 21st of last month (+8.0 won).
That day in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,469 won, down 3.0 won from the previous day. This followed the Bank of Korea (BOK) saying the previous evening that it released a one-year extension through the end of next year of its foreign exchange swap contract with the National Pension Service with a $65 billion limit. Under the contract, the National Pension Service can exchange dollars and won with the BOK instead of buying dollars in the market, so the foreign exchange swap is cited as a factor that curbs the won's depreciation (a rise in the won-dollar exchange rate).
However, the won-dollar exchange rate began narrowing its decline in the morning and turned to a full uptrend in the afternoon. Around 12 p.m., the rate moved up from the 1,460-won range to 1,470 won and then drew a clear upward-sloping curve right up to the weekly session's close. As a result, the won-dollar exchange rate finished the day at 1,477 won, up 6 won from the previous day.
Min Kyung-won, a Woori Bank researcher, said, "As concerns emerge that artificial intelligence (AI) is overvalued, it is chilling foreign investors' sentiment toward the domestic stock market," and noted, "The won-dollar exchange rate appears to have risen due to foreign investors selling domestic stocks." When foreign investors convert won obtained by selling domestic stocks into U.S. dollars, dollar demand increases, providing material in the market for dollar strength (a rise in the won-dollar exchange rate). That day, foreign investors dumped 1.39 trillion won worth of domestic stocks.
Meanwhile, the government's foreign exchange market stabilization policy appears to be having little effect in the market. At 11 a.m. that day, the Ministry of Economy and Finance gathered major exporters, including Samsung Electronics and SK hynix, for a roundtable. It asked for cooperation to stabilize the foreign exchange market, including expanding hedging, but the won-dollar exchange rate still closed higher that day.